Compliance Checks

When you think about mystery shopping and compliance, you usually don’t think of marketing compliance. There’s age compliance checks for alcohol and tobacco, and marijuana compliance checks in those states that sell marijuana legally. There can even be compliance safety checks at businesses where safety is a prime concern.

But we don’t really talk about what I like to call marketing compliance checks. These are the checks a brand might want performed on their franchise owners to ensure they’re posting the month’s latest promotional signage and materials.

For example, brands like Subway, Dairy Queen, and McDonald’s are often franchisee-owned, but all of the promotional materials comes from the corporate office. Otherwise, every franchise would have their own separate promotions, their own graphic designs, and as a result, different levels of quality of their promotional materials.

So to avoid all of that, the corporate headquarters will produce all of the materials, usually in-house, and then send it to all of their franchisees with strict instructions on when to put them up. They usually up on on the 1st of the month, but many times, they have until the 5th.

Of course, they can’t be sure the franchisee didn’t actually get the signage and promotional materials up in the first place. There are too many to visit, or they’re spaced too far apart, or the regional manager doesn’t have time to get to them all in a couple of days.

If a restaurant brand — or even a retail clothing store — is running a national campaign, you can’t very well spend hundreds of thousands of dollars on it and then have a few franchisees who mess it up for their own region because they didn’t put their posters up until the 15th.

This is where a mystery shopping agency can step up and help out. With the help of a small army of mystery shoppers, a corporate marketing department can determine when all the franchises are in compliance with their monthly promotional activities.

The mystery shopper can snap a couple of quick photos of the promotional materials that have been put up, upload those to the corporate brand’s account, and the marketing staff can ensure that all materials are in place by the deadline.

And you can kill two birds with one stone by asking the shopper to perform other checks, such as bathroom cleanliness, employee friendliness, and food tastiness.

(Sorry, I was trying to rhyme everything.)

Since mystery shopping agencies spend a lot of their time already doing restaurant shops, checking out food quality and facility cleanliness, it’s easy enough to ask the shoppers to do a marketing compliance check at the same time. (Or to do a bathroom check while they’re on a marketing compliance shop.)

If you’re going to spend a lot of money every month ensure that your franchisees have the latest and best marketing materials, doesn’t it make sense to ensure they’re actually using them? Marketing compliance checks can help you to make sure every franchise of your brand has the right signage, promotional materials, ingredients, and even the pricing in place. To learn more, please visit our website. You can also speak to one of our marketing compliance experts and get many of your questions answered.

Four of the dealers failed because they were pulling a bait-and-switch. That’s where they advertise a base model of car at a very low price, and then tell customers that model’s not available anymore before upgrading them to a more expensive model. In some cases, secret shoppers were told that the base model was only available as a factory order, and would take as long as six months to arrive.

Four dealers were also found to have added several extra charges, including charges for things like filling out paperwork and fake “Green” charges that look like payments to some environmental authority that doesn’t actually exist. The APA story even said that while some charges were in the fine print of the dealer advertising materials, other charges seemed to be completely made up. Secret shoppers found charges like a $795 brokerage fee, $549 to fill out a bill of sale, and an Additional Dealer Markup (listed as ADM) of $1,599.

The APA also found deceptive advertising offers, such as a Ford dealer promising a $1,000 discount to Costco members, although it wasn’t available on the model of Ford Focus the secret shoppers inquired about.

Secret shoppers were also given a lot of misinformation and misrepresentation about the warranties. In fact, half of the dealers misrepresented the manufacturer’s warranty for rustproofing as a way to upsell extra coverage.

“If a salesperson tells you there’s no corrosion warranty on a new vehicle, they’re lying,” said the APA. “All carmakers offer corrosion warranties from three to 12 years, depending on the brand.”

The APA urged British Columbia’s Vehicle Sales authority to “clamp down on dealerships that add extra charges” as well as close loopholes that let auto manufacturers break the rules that apply to dealer advertising.

In the meantime, congratulations to the Canadian Automobile Protection Association and their secret shoppers for protecting Canada’s buying public from overpaying for their cars or getting needlessly ripped off.

If your organization ever needs secret shoppers for fraud enforcement and legal compliance, Measure CP can help. Our team of experts can help you put together a brand protection and compliance program to ensure the laws and regulations are being met and people are being protected from unscrupulous or dangerous violations.

We can’t even get that for alcohol age compliance checks here in the United States.

The lottery operator Camelot has conducted their mystery shopping programme (we spelled it that way because they’re Canadian and they use the British spelling) for more than a decade, and they’re very strict about how they run it.

Basically, if a retailer fails the age compliance checks on three occasions (not in a row; if they fail them ever), their National Lottery ticket selling terminal will be suspended and could be removed entirely. And since retailers get a lot of money from lottery ticket sales, they can’t afford to lose that terminal.

Retailers earn a 5% commission on every online sale and a 8% commission for every off-line ticket sale. Retailers are also entitled to receive a 2% bonus for any online prize redemption of under $300 and 3% for any offline prize redemption of under $200.

Still, addiction to gambling is a serious problem, so Camelot’s concerns are well-founded and respectable.

A basic check shows that we don’t seem to have basic age compliance checks in the United States when it comes to the lottery. A May 2016 story showed Orlando gas stations were selling lottery tickets to underage buyers, as the News 6 WKMG TV station worked with 13- and 14-year-old kids to buy lottery tickets. (Wawa moved their lottery ticket machines so they were more visible to the store employees, in response to the story.)

Lottery retailers — gas station, liquor stores, and even grocery stores — should take a cue from our neighbors to the North and start running age compliance checks on customers to prevent underage buyers and gambling addicts from buying tickets illegally or recklessly.

For more information on running your own age compliance checks, visit the Measure CP website and ask to speak to one of our compliance experts about how to run compliance checks in your own stores.

Compliance Checks

My friend, Erik, recently met a woman who worked as an auditor for a water park/community pool safety certification company. He asked her a few questions about it, and turned it into an article for us.

I met Michelle (not her real name) at a coffee shop while she was studying to be a physician’s assistant, and she mentioned a job she used to have that saw her traveling all over the country.

“What was that?” I asked, envisioning a salesperson or some kind of consultant.

“I was a safety auditor,” Michelle said. “Sort of like a secret shopper for a company that certifies water parks and community pools for safety purposes.”

Ellis & Associates is an international aquatic safety and risk management consultant agency. According to their website, the company is. . .

Michelle had been a lifeguard in high school and college, which made her a natural fit for the position. And in her role, which saw her driving all around the country, from city to city, pool to pool, she would not only train the lifeguards, but then she would secretly videotape them at work. This would help them measure the accountability for their actions and help them understand what they were doing right or wrong.

“Parents often treat the lifeguards as babysitters,” said Michelle. “They just drop them off at the pool and expect the lifeguards to watch over them. The goal is to have zero drownings and near drownings.”

“A near drowning is when you have to resuscitate a victim,” she added.

Michelle’s employer has about 20 auditors on the road each summer. They spend 90 days during the summer driving all around the country, visiting a different state and water park every day.

“It’s kind of funny to see a bunch of 20 year olds terrorize the US with their Avis cars,” said Michelle.

But this is not a typical secret shopper role, she said. They look for someone who’s had supervisory and teaching experience. Michelle had originally been a camper at a summer camp, then a volunteer, and finally a camp counselor. Then she started teaching lifeguard classes and became an on deck supervisor.

Michelle originally applied when she was 19, but didn’t get the role. She applied again the following year, and they said the only reason she didn’t get it the year before was because she was too young. They told her she had the best communication interview the previous year, out of all 500 applicants.

Yes, that’s right: five hundred applicants. A lot of people want to be water park safety auditors, but they only need 20 for the 90 day summer. So let that be a lesson to anyone who wants to be a secret shopper: you need strong communication skills in order to impress your potential employer. You need to be able to write clear, concise reports, so communication skills are a must.

Michelle said the main operating season for water parks and pools are the unofficial days of summer — Memorial Day to Labor Day. That’s where most of the auditors spend their time. Then there are the year-round clients, like we have here in Florida. They get quarterly audits from the off-season auditors who live in the state. Or maybe they’ll send someone from their home office, if necessary.

Michelle is fortunate in that she’s neither regular season or off-season. She’s more or less a free agent, and will get an occasional call to see if she’s available to do a training and assessment.

This was an interesting look to see another place where a secret shopper type of function can be performed, but outside the traditional mystery shopping arena. This one requires special skills that you would have started acquiring while you were still in high school. While it may not be a lucrative career move, it’s a good way for a college student to spend their summers.

And if you’re a looking for a lifeguard or even a water safety supervisor at a YMCA/YWCA or even major theme park, check out Ellis & Associates’ job listing’s page. That’s where you’ll find the safety auditor positions — and they’re already recruiting.

Compliance Checks

The Australian Securities and Investments Commission (ASIC) has started a mystery shopping program — they call it “shadow shopping” down under — as part of its review of the mortgage broker industry. According to BrokerNews.com, ASIC is “delving into the suitability of brokers’ advice.”

“While broker remuneration practices may have an impact on home loan choice, ASIC recognises that a range of other factors influence which home loan products are purchased, and that the purchase experience may vary across purchase channel, i.e. via broker compared to directly from a lender,” said Michael Saadat, ASIC’s senior executive leader for deposit takers, insurers and credit services.

Ultimately, they want to know which factors, other than commission, affect which home loans clients buy, and whether consumer outcomes can be improved.

But this is more than just a marketing move. While ASIC wants to gain insights into how borrowers buy home loans or find decision making points in the whole process, this is also about regulatory compliance and ensuring that brokers are following the legal requirements in the Australian home loan process.

This past November, Saadat told Australian Broker magazine that anything they discovered “will be more about understanding to what extent brokers are potentially not meeting their legal obligations, and whether ASIC, for example, needs to produce more guidance around what they can or can’t say to consumers or whether some other action is required”.

I sometimes wonder if we’d had similar oversights and compliance mystery shopping programs if the mortgage/credit crash of 2008 could have been avoided or at least lessened. I’m glad to see that mystery shoppers are going to be involved in regulatory compliance efforts.

This is something that mystery shopping agencies, whether in the US, UK, Australia, or elsewhere, can do for lawn enforcement agencies, government agencies, or regulatory agencies. The way ASIC’s program, and any other mystery shopping program, will work is to have either people who need home loans evaluate their loan buying experience, or hire shoppers to pose as home buyers and go through the loan application process without actually taking out the loan.

We’ve done age compliance shops for the purchase of tobacco and alcohol products, regulatory shops for fair housing in home and multi-family dwelling rentals, and have even helped some retail chains ensure their clerks are properly trained on the different rules and laws regulating sales of certain products.

Compliance Checks

Compliance checks are essentially surprise inspections that federal government agencies and local law enforcement will carry out to ensure that a retail establishment is following the rules and laws created by the government concerning the products being sold.

In other words, they check up on stores to make sure they’re not doing anything illegal.

One example of a compliance check is the age compliance check, which is done to ensure people buying alcohol and tobacco are the legal minimum age to purchase it. The legal age for buying alcohol is 21, and it’s 18 for buying tobacco.

Alcohol retailers that fail to card their customers to determine their age can be penalized and fined by the local law enforcement agencies or the state’s Liquor Control Board, in conjunction with state and local law enforcement. However, it’s usually the Food and Drug Administration (FDA) that conducts tobacco compliance checks.

The FDA calls them “Undercover Buy Inspections,” where the retailer is not aware the inspections are taking place. Minors, or people who look very young, will come into the store, buy the product, and then the enforcement begins — it starts with a warning letter or ticket.

A second infraction draws a monetary penalty that can be pretty stiff. Two violations in 12 months is $279, four violations in 24 months will cost you $2,236, and six violations in 48 months costs $11,182. So these guys aren’t messing around!

And if you persist in violating the law, the FDA can hit you with a No-Tobacco-Sale Order (NTSO), where you’re not allowed to sell tobacco products at that specific location for a long period of time.

What About Marijuana Compliance Checks?

Meanwhile, in states where it’s legal to sell marijuana, compliance checks are often overseen by local law enforcement and the Liquor Control Boards

The license does not immediately input all marijuana and marijuana product(s) into the State-mandated inventory tracking system and account for all variances.

The dispensing facility does not have accurate or updated tracking logs for visitors, security and/or waste.

The business does not have all required financial business documentation available as required (federal and state).

Marijuana and marijuana product sold to patients does not include all required public health and safety warning statements as required by law.

Surveillance cameras do not have clear, unobstructed views of the license premise and blind spots or sight obstructions exist.

Compliance checks can be a royal pain, especially if you’re the one caught selling products to underage buyers or patients who don’t have the right paperwork. This is where it helps to work with a mystery shopping agency.

Mystery shoppers can help liquor and tobacco retailers and marijuana dispensaries stay in compliance with their local laws. Many times, it’s the clerks and non-owners/non-managers who either aren’t fully aware of the laws or don’t have a vested interest in avoiding penalties and fines causing the problem. Working with a mystery shopping agency like Measure CP can help you run spot compliance checks without actually suffering any financial and legal penalties from anything we find. Our job is to report our findings to management, so we can help you find any shortfalls and holes in training.

And we don’t just have to do compliance checks; we can do other checks, such as restroom cleanliness, condition of the stores, friendliness of the staff, or anything else you want to know about at your retail establishment.